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How do MBEs participate in the section 8(a) program?
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Posted On: Wednesday December 31st, 2003 at 12:00am EST
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The section 8(a) business development program is statutorily authorized to provide a vehicle through which Federal agencies can make prime contract awards to small businesses owned and controlled by individuals certified as socially and economically disadvantaged. Federal agencies are authorized to set aside specific requirements for competitions limited to 8(a) participants, and sole source awards may be made to participants where their dollar values do not exceed, inclusive of options, $5 million for manufacturing requirements and $3 million for all others.
To qualify for the program, a small business must be certified by SBA. By law, certain groups may be presumed to be socially disadvantaged. The legislation specifically refers to the likelihood that African Americans, Hispanic Americans, Asian Pacific Americans, Native Americans, and Subcontinent Asian Americans are socially disadvantaged. Other individuals can be admitted to the program if they show through a "preponderance of the evidence" that they are disadvantaged because of race, ethnicity, gender, physical handicap, or residence in an environment isolated from the mainstream of American society.
In order to meet the economic disadvantage test, all individuals must have a net worth of less than the applicable threshold, excluding the value of the business and personnel residence. Successful applicant firms must also meet applicable size standards for small business concerns; be in business for at least two years (absent a waiver); and display a reasonable potential for success.
It is important that MBEs understand the requirement for “potential for success.? If SBA finds that a small MBE lacks that potential, the MBE will not be certified for 8(a) participation, and about half the minority applicants for the 8(a) program are denied certification based on this or economic reasons. The SBA regulations determine potential for success in terms of:
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1
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access to credit and capital, including, but not limited to, access to
long-term financing, access to working capital financing and
bonding capability;
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2
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technical and managerial experience of the applicant concern's managers, the operating history of the concern,
the concern's record of performance; and
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requisite licenses if the concern is engaged in an industry
requiring professional licensing.
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Once certified, a firm is approved for program participation for nine years following notification of approval, and remains SDB certified for three years following the date of its last annual review. |
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